Manufacturing production continued to decline further; this was according to Stats SA in their release for May on Thursday
Image: Simphiwe Mbokazi/Independent Newspapers
Manufacturing production continued to decline in May, by 4,3% over the same period a year before, a figure worse than what economists had expected.
“The largest negative contributions were made by • food and beverages (-6,4% and contributing -1,6 percentage points); • basic iron and steel, non-ferrous metal products, metal products and machinery (-5,6% and contributing -1,3 percentage points); and • wood and wood products, paper, publishing and printing (-11,0% and contributing -1,0 percentage point),” Statistics SA said on Thursday.
Seasonally adjusted manufacturing production increased by 1,1% in May 2026 compared with April 2026. Over the three months t end-May 2026, seasonally adjusted manufacturing production decreased by 1,0% compared with the previous quarter.
Professor Simphiwe Madikizela, an economist at the University of South Africa (Unisa), said that this is a concern for the sector that has been battling in the previous quarters due to the structural challenges and constraints in the logistics sector, in the ports and rail network infrastructure, as well as rising electricity prices and other costs of doing business.
“We will recall that some operators moved to Maputo corridor and harbour due to a backlog in Durban harbour, and we also know the challenges in other ports, like Cape Town, that have regressed,” added Madikizela.
Madikizela said that the Middle East war that began at the end of February 2026 has made matters even worse in the manufacturing sector.
“Unfortunately, the outlook is not looking positive as the ceasefire has come to an end and the peace deal has been violated with more strikes and attacks on the ships. Already, the price of crude oil has increased sharply to $78 per barrel from levels of $70 per barrel, which are levels before the war. The US president has warned that strikes and attacks will be intensified, which is unfortunate. We, however, still hope the peace talks will resume.”
Prof Raymond Parsons, a North West University Business School economist, said the worse-than-expected year-on-year decline of 4,3% confirms that manufacturing remains under severe pressure. “While the 1,1% month-on-month uptick is positive, it does not erase the losses of the previous three months. Both cyclical and structural factors are keeping current manufacturing trends in negative territory. It is also combined with rising excess capacity in the sector.”
Parsons added that the impact of the cyclical global energy crisis is therefore still playing itself out across the economy. “On the structural side, inefficient economic infrastructure continues to weaken the price competitiveness of many South African goods. If the Middle East situation can soon again be stabilised, it will aid the manufacturing recovery across several key areas.”
Lara Hodes, Investec economist, said the manufacturing production contraction extended the weak start to the second quarter after April’s -2.9% year-n-year decline.
“The reading was weaker than consensus expectations (Bloomberg). This indicates that the sector is still struggling to gain meaningful momentum against a backdrop of soft demand, elevated price pressures from the oil price shock, and persistent global uncertainty,” she said.
Hodes added that a breakdown of May’s manufacturing production data reveals that seven out of the ten categories included in the manufacturing basket contracted year-on-year.
“The largest negative contribution stemmed from the food and beverages segment, which makes up a notable 22,2%. Specifically, it detracted -1,6% from the headline reading on the back of a -6,4% y/y decline in production.”
Hodes said this is in line with the movement of the Absa Purchasing Managers’ Index, which declined by 1,8 points in May. “Business activity slipped back into contractionary territory, while new sales orders also fell below 50, on weaker demand conditions.”
Hodes added that manufacturers have been faced with a sharp rise in input costs as a result of the war in the Middle East. “Higher oil prices, rising fuel costs, and supply-chain concerns contributed to a broad-based increase in cost pressures across the sector. Moreover, the sector continues to be held back by logistics inefficiencies weighing on export potential and elevated administered costs.”
Thanda Sithole, FNB and Wesbank senior economist said that manufacturing activity remains constrained, with output declining by 1.7% in the first five months of 2026, exceeding the full-year contraction of 1.3% recorded in 2025. “The sector is expected to remain under pressure in the near term amid elevated production costs stemming from the initial impact of the Middle East conflict, alongside persistent domestic infrastructure constraints."
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